Insolvency risk keeps climbing for Yorkshire retailers
Nearly half of retail outlets in Yorkshire and the Humber are currently deemed to be above average risk of insolvency, the latest figures show.
According to data from insolvency and restructuring trade body R3, the proportion of shops at risk has climed by more than 14% in the first nine months of 2018.
An estimated 44.3% of firms fall into the category of having an enhanced level of insolvency risk, which is above the national average of 42%.
It means more than 58,000 active retail businesses in Yorkshire and the Humber – of a total of around 138,000 – are deemed to be at risk for the coming 12 month period.
For comparison, in November 2017, the nationwide risk level stood at 29%, highlighting the difficult trading conditions that many businesses have had to face.
The South West and Wales also have elevated insolvency risk levels that are beyond the national average, with 48.6% and 45.4% of firms in those regions respectively deemed to be facing financial pressures.
In contrast, retailers in London and Northern Ireland continue to perform strongly, as 38% and 38.9% of shops in those regions carry a heightened risk level.
Of all Yorkshire retailers, home furnishing stores face the highest level of risk, as R3’s figures suggest that 47% face a high risk of insolvency in the next 12 months, followed by 43.3% of shoe shops and 41.6% of clothes stores.
Inflation was at a six‐month high in September, while reduced consumer spending and economic uncertainty have also hit retailers hard.
Eleanor Temple, R3’s Yorkshire chair, warned that the high street has some “tough challenges ahead”, especially as rent costs continue to rise, online competition grows and labour costs go up.
The key for any business experiencing financial distress is to act quickly and seek appropriate advice from a qualified insolvency practitioner.
This ultimately increases the number of potential rescue and restructuring processes that could be used, while it may also be possible to streamline business activity to reduce financial pressure in the
long term.
By Phil Smith